1. Overview

VAT margin schemes tax the difference between what you paid for an item and what you sold it for, rather than the full selling price. You pay VAT at 16.67% (one-sixth) on the difference.

You can choose to use a margin scheme when you sell:

  • second-hand goods
  • works of art
  • antiques
  • collectors’ items

You can’t use a margin scheme for:

  • any item you bought for which you were charged VAT
  • precious metals
  • investment gold
  • precious stones


You buy a work of art for £1,500 and sell it for £2,000. Using a margin scheme, you pay VAT at 16.67% (one-sixth) on the difference: £500. This means you’ll pay £83.33.

How to start

You can start using a margin scheme at any time by keeping the correct records, and then reporting it on your VAT return. You don’t have to register.

You’ll have to pay VAT on the full selling price of each item if you don’t meet all the scheme’s requirements.


There are special rules if you’re selling:

There are also special rules for dealers, pawnbrokers and auctioneers.